Network and general equilibrium effects of carbon taxes and deforestation

Resumo

We develop a multi-sector general equilibrium model, with intersectorial input–output linkages
 and CO2 emissions, to investigate the economic impacts of the implementation of a carbon
 taxation policy in an economy permeated by preexisting distorting taxes. The model is calibrated
 to Brazil and the carbon price is set so that the economy meets its annual global greenhouse
 gases emissions pledge for 2030 based on the Paris Agreement. In the presence of production
 networks, the initially concentrated tax shocks propagate throughout the economy, provoking
 widespread relative input price variations. Depending on the deforestation scenario, GDP losses range between 5.71% and 0.25%, the latter corresponding to the record low deforestation levels of 2012. Sectors are heterogeneously affected. As expected, those sectors more reliant on taxed pollutant resources (e.g., Energy and Transport) suffer sizable decreases in production. But a significant part of the impacts on sectorial production comes indirectly through network effects, even in the absence of new taxes levied on the sector’s product or its direct inputs. When
 Agriculture & Livestock are also taxed, GDP losses are considerably smaller.

Ficha do documento

Tipo

Estudo

Ano

2023

Instituição

Escola de Pós-Graduação em Economia da FGV

Fonte

Repositório da FGV

Idioma

Inglês

Acesso

Não informado

Identificador

oai:repositorio.fgv.br:10438/33120

Temas

Meio Ambiente

Palavras-chave

Carbon taxInput-output linkagesClimate changeGreenhouse gasesImpostos de carbonoMudanças climáticasGases estufa